I’ve been covering Tesla Motors (TSLA) for a few years now (not as much recently) and since the company went public in June of 2010, the scrutiny level continues to rise. With shareholder fortunes at stake and a general skepticism of electric cars, particularly of those not made by Toyota (TM), the microscope has zeroed in on Tesla. If there is one thing you can count on, it’s that CEO and Co-Founder Elon Musk won’t simply rely on a PR department damage control piece. He’ll get into the ring himself and throw some punches.
In 2008, he hit the show Top Gear with a lawsuit claiming the show lied in order to sensationalize the piece where it showed the Roadster dying after just 55 miles along with criticizing the brakes as deficient. The lawsuit was thrown out last year with the judge saying the show is more for entertainment rather than factual journalism so couldn’t be punished for embellishing the truth (which in fact it had). Around the same time last year, the brick issue was making the rounds.
The latest disagreement (that’s putting it nicely) involves New York Times writer John Broder who wrote about his journey in the Model S from DC to New York which ended with the Model S on a flat bed tow truck. I won’t get into all the details of the “he said, he said”, but Broder claimed the car struggles in cold temperatures with a significant depletion in range. Musk countered with tracking data from the car claiming that instructions weren’t followed by Broder.
The end result of all this is another round of skepticism that in fact a Tesla made car can in fact be a mainstream car while Broder’s credibility is questioned. Some point out the fact that he’s not an automotive expert and actually focuses on the oil industry. Fair or not, you can understand the criticism. Probably not the best guy to put on this assignment. It should be noted that the NYT’s auto expert wrote a glowing piece of the Model S in September, but based on a drive in California, not the frigid NE.
Taking a step back and viewing the big picture I think most of us can agree that the Model S, which is designed to hit more of the mainstream market, just isn’t quite there yet. Perhaps in another year or two. You can start at the price point which is out of the range of most middle class families and then consider the potential issues including lack of infrastructure. The company originally expected to sell about 5000 of the Model S in 2012, but estimations are calling for about 3500. We’ll know the exact numbers once the company releases it’s much anticipated earnings report after the close on Wednesday.
Heading into this earnings report, the stock chart for TSLA actually looks considerably bullish, so perhaps traders are forecasting a surprise the to the upside. The stock broke out of a real nice looking cup with handle base a few weeks ago on decent volume and the pullback off the NYT story at least for the time being is a very normal pull back. There is strong support around $35 and it looks like that level will need to be tested. Should it be tested and it holds, that would be an excellent entry point.
To wrap up this post, I just want to say that regardless of whether you believe in electric cars or not, or whether you like Elon Musk, you have to admire the drive and entrepreneurial spirit of Musk. This is a guy who isn’t afraid to put it all on the line and continue to forge ahead when others say it can’t be done. This is exactly the attitude that is the backbone of the success of this country and what continues to make it great today. I’m rooting for Musk and Tesla and do think they will continue to improve the car over time. Costs will come down and maybe in a year or two you will see the Jones next door with a Model S in the driveway.